Hong Kong is the place to be for retailers exploring foreign markets.
For the third year in a row, the region has scored the top spot on an
annual list of most targeted markets for international retailers, made by
real estate investment firm CBRE. A total of 85 international retailers
have entered Hong Kong’s market for the first time last year, including
fashion brands Eres, GU and Birkenstock. Dubai and Taipei come next on the
list, with 59 and 52 new international retailers entering the markets
respectively in 2017. Named “How global is the business of retail?”,
CBRE’s study is now in its 11th year and examines 47 countries and 123
global cities.

Top 10 most targeted cities in 2017 (by
number of new international retailers):

1. Hong Kong (85)

2. Dubai (59)

3. Taipei
(52)

4. London (49)

5. Tokyo (46)

6. Doha
(43)

7. Toronto (40)

8. Singapore (38)

9. Prague
(37)

10. Shenzen (37)

Why
international retailers are attracted to Hong Kong, Dubai and
Taipei

Asia-Pacific is at the core of many retailers’ growth
strategy, as half of the top 10 markets are located in the region.
According to the study, Hong Kong tops the list because it is perceived as
an ideal entry point. “Foreign retailers are attracted by Hong Kong’s
market maturity to create awareness in the Asia-Pacific region, as well as
the geographical advantage to facilitate long-term expansions in to China”,
says the report. Don’t be surprised if Hong Kong winds up at the top of the
list again next year, as CBRE forecasts retail market sentiment to improve
even further in 2018, thanks to a slowing rental rate decline and falling
high-street vacancy in the area.

Although Dubai is behind Hong Kong
when it comes to the number of new foreign retail businesses entering the
market for the first time, it still holds the first place in total number
of international retailers operating in the city. 62 percent of all
retailers in Dubai are not native. However, CBRE notes that retail
expansion is slowing down in UAE’s most populated city, which has led to
growing numbers of vacant real estate and reduced rental prices at shopping
malls. But these factors are not expected to threaten Dubai’s noteworthy
performance in the ranking, as the city plays the same strategic role for
the Middle East as Hong Kong does for Asia-Pacific. Occupancy rates at
high-end malls such as the Dubai Mall, Mall of Emirates and Battuta Mall
are still running between 95 percent to 98 percent, according to the
study.

Taipei’s position on the list is due to landlords’ efforts to
differentiate their shopping malls and department stores from competitors,
according to CBRE. Competition is fierce as most retailers focus on the
Xinyi shopping district, forcing many businesses out of the
market.

Toronto is the only city in the Americas to make the
top 10. Since 2014, the Canadian metropolis has been attracting 30 new
foreign retailers a year on average. So what happened in 2017? According to
the report, the renovations and expansions undergone by Yorkdale Shopping
Centre, which cost over 700 million Canadian dollars (approximately 405
million pounds), have proved successful in attracting luxury brands. West
Queen West, dubbed “the world’s second hippest district” by Vogue magazine
in 2014, is also on the radar of luxury retailers.

But which
countries have the most retailers expanding overseas? US retailers were the
most active in 2017, with an expansion rate of 19 percent and a total of 42
markets targeted, most of them in the Middle East. Italy and France share
the second place, with an expansion rate of 10 percent, followed by Japan,
with 9 percent. All cities in the study have seen at least one new
international brand open for the first time in 2017, with 41 percent of
international retailers targeting more than one city.